(SitNews) Washington, D.C. - The Federal Energy Regulatory Commission’s (FERC) is proposing a new method to calculate annual charges for hydropower projects on federal lands in Alaska. FERC is seeking comment on the use of a statewide average per-acre land value rather than a regional per-acre land value, which would reduce recent land use fee increases and help lower the cost of future projects.

“FERC’s proposal is a step in the right direction for Alaskans served by utilities that generate clean hydroelectric power from facilities on federal lands,” said U.S. Senator Lisa Murkowski (R-AK). “This new methodology recognizes the uniqueness of land valuation in Alaska, and will help ensure reasonable rates while removing a growing impediment to development in our state.”

The new proposal announced August 17, 2017 follows a concerted effort by Murkowski and Alaska entities responsible for paying the land use charges to persuade FERC to change its methodology. Quoting a news release from Murkowski, in early 2016, the current methodology resulted in an unjustified 71 percent increase in land use fees for hydroelectric projects on the Kenai Peninsula. It has resulted in a 384 percent increase in land use fees for those projects, and a 679 percent increase in land use fees for the Solomon Gulch project near Valdez, since 2008. Projects in the Fairbanks-Railbelt region have also been affected.

Murkowski has repeatedly argued the current methodology violates the Federal Power Act, which requires fees for the use of federal lands for energy projects to be “reasonable.” She has encouraged FERC to base its rates on the statewide average of all land values in Alaska, given the size of the state and its lack of development. 

The new proposal, if confirmed by FERC after a 60-day public comment period, will effectively roll back land use charges for most of the 21 hydro projects in Alaska that are located on federal lands, and reduce land use charges for 13 of 15 state utilities that operate hydro projects. According to one informal estimate, land use fees could initially drop by 25 percent.

FERC issued a Notice of Inquiry in November 2016 soliciting input on its current methodology for calculating annual charges for the use of government lands in Alaska.  

In 2013, FERC issued a final rule revising the methodology for calculating rental rates for the use of government lands by hydropower projects. The new fee schedule is based on a formula with the following components: a per-acre land value by county or geographic area; an encumbrance factor; a rate of return that converts the land value to a rental value; and an annual inflation adjustment. 

FERC-regulated hydropower licensees must compensate the U.S. government for the use of federal lands through payment of an annual charge. The fees collected are distributed to the U.S. Treasury and the states in which the projects are located.  

Murkowski is the chairman of the Senate Committee on Energy and Natural Resources.

FERC took action on this Alaska issue as one of its first orders of business since its quorum was reestablished last week. Murkowski shepherded the nominations of new FERC members Neil Chatterjee and Robert Powelson through Senate confirmation earlier this month.

Comments on the NOPR are due 60 days after publication in the Federal Register.

On the Web:

Annual Charges for Use of Government Lands in Alaska
https://www.ferc.gov/CalendarFiles/20170817162443-RM16-19-000.pdf

Editing by Mary Kauffman, SitNews

Source of News:

Federal Energy Regulatory Commission
www.ferc.gov

Office of US Senator Lisa Murkowski
www.murkowski.senate.gov

 

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